Hey, funny thing you mention this, I'm trying the same thing. So far found a couple of leads.

First, the W3C Style website (http://www.w3.org/Style/) uses a red colored border with gray background as a highlight when you hover with a mouse or tab to and give focus to a link on the page. I would like to use an add-in or script that will highlight elements on the page as I tab through the page, as I need to verify tab order.

Hi, found a really good test page for you. It has a sample form that you can interact with and it shows you the events fired in a "Test results" window on the left side. Also has options on the right side that lets you select what you want to track.

I can draw the selection rectangle but ONLY on the form itself - when I try to draw the selection rectangle within (or over, which ever way you wish to look at it) the embedded web browser control the selection rectangle does not work - actually what happens is it draws the selection rectangle behind the web browser...

Sorry, I didn't understand you were going this route. Anyway, I have been working on the WebBrowser control in VB.net as well. Your code is using events in Form1, and is acting on Form1 not the WebBrowser control. System.Windows.Forms.WebBrowser does not offer Paint or mouse events. I don't know how it works in the WebBrowser, but you may have to dig deeper, maybe even look at GDI.